Even for fully equity-financed firms there can be substantial effects of taxation on aftertax costs of capital when there are depreciation deductions. Among the few studies of these effects, even fewer identify all effects correctly. Some claim to characterize the cost of capital, but fail to identify the marginal investment. When this is taxed together with inframarginal, marginal beta differs from average. This study shows the relation between the two and derives a correctly tax-adjusted weighted average cost of capital. To find asset betas, observed equity betas should not only be unlevered, but also “unaveraged” and “untaxed.”